VRTX Down 16% In A Month. How Confident Are You In The Stock?
Vertex Pharmaceuticals (VRTX) stock is down 16.0% in 21 trading days. The stock looks fairly priced at the moment, though history suggests you may benefit from buying dips. Consider the following data:
- Size: A $99 Bil company with $11 Bil in revenue currently trading at $387.18.
- Fundamentals: Last 12 month revenue growth of 10.5% and operating margin of -1.7%.
- Liquidity: Has Debt to Equity ratio of 0.0 and Cash to Assets ratio of 0.3
- Valuation: Currently trading at P/E multiple of 27.3 and P/EBIT multiple of 22.6
- Has returned (median) 25.8% within a year following sharp dips since 2010. See VRTX Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for VRTX, see Buy or Sell VRTX Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and VRTX drops another 20-30% to $271.03 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Vertex Pharmaceuticals (VRTX) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: VRTX provides therapies for cystic fibrosis, marketing SYMDEKO, ORKAMBI, and KALYDECO, with a pipeline including VX-864 for AAT deficiency in Phase 2 trials.
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2022 Inflation Shock
- VRTX stock fell 26.6% from a high of $241.31 on 25 January 2021 to $177.01 on 5 October 2021 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 28 January 2022
- Since then, the stock increased to a high of $516.74 on 10 November 2024 , and currently trades at $387.18
| VRTX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -26.6% | -25.4% |
| Time to Full Recovery | 115 days | 464 days |
2020 Covid Pandemic
- VRTX stock fell 31.7% from a high of $303.10 on 20 July 2020 to $207.01 on 29 October 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 August 2022
| VRTX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -31.7% | -33.9% |
| Time to Full Recovery | 655 days | 148 days |
2018 Correction
- VRTX stock fell 21.2% from a high of $192.74 on 28 September 2018 to $151.91 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 18 January 2019
| VRTX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -21.2% | -19.8% |
| Time to Full Recovery | 25 days | 120 days |
2008 Global Financial Crisis
- VRTX stock fell 64.0% from a high of $40.56 on 12 September 2007 to $14.59 on 10 March 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 November 2009
| VRTX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -64.0% | -56.8% |
| Time to Full Recovery | 610 days | 1480 days |
Worried that VRTX could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.